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In my previous blog post, I discussed category management, cognitive, and how these two tools can be used to provide value in the federal government. By reviewing best practices in the private sector as well as initial pilots in the federal government, transformation is possible.
The dawn of the cognitive era has brought forth two game-changing capabilities. First, cognitive tools can capture and interpret unstructured data, such as text, speech, or images. Considering that 80 percent of all information that humans capture and process is unstructured, this vastly expands the data set for analysis and provides more insight to the procurement decision. Second, cognitive tools learn based on feedback, which allows filtering and prioritization, and more quickly summarizes the most relevant information to a scenario. Over time, the tools will provide increasingly more accurate views of data relevancy.
Commercial companies use cognitive tools in their own procurement processes to drive additional value, as outlined in a few examples below.
Cognitive Category Management Use Case
How do these components integrate to provide value to the buyer and end-user? Below is a graphical use case of how cognitive tools could be used to enhance visibility to the process, improve the end-user experience, and enable the category strategy. (1) Data is extracted from multiple agencies and external data sources. Cognitive tools clean and normalize the data for commonality. Then, this data can be used to (2) conduct cross-agency spend analytics, made visible through a dashboard to a category lead, contract officer, or program manager. From this analysis, category leads would craft strategies and conduct a strategic sourcing events based on those strategies. Negotiations of the resulting contracts would (3) leverage tools, like a cognitive dynamic pricing engine, to capture key data pertinent for price negotiations. Preferred products and services would be advocated and available through (4) an easy-to-use buying assistant, simplifying the buying experience and enabling the planned category strategy.
While transformation across all federal categories could take 5-7 years, significant value can be realized in six to nine months with the right strategy and approach. As such, below is a proposed set of guidelines to migrate to a Cognitive Category Management (CCM) model.
Category Management is a proven and powerful supply chain practice, used by government and industry alike to save money and enable key mission goals. The use of more sophisticated technology and digital services, such as cognitive capabilities, provides a focal point for maximizing and accelerating the benefits. CCM would expand the current Category Management effort by addressing key federal gaps in people, process and technology capabilities. While the federal government has established a solid Category Management framework, it is not enough to realize the potential. Deep category expertise will accelerate strategies and value. User-centric mobile capability will simplify ordering and status checks. A cloud-based cognitive analytics platform that captures target data from all agencies, and leading-edge cognitive tools will capture and normalize both structured and unstructured data to provide buyers with critical suppliers, pricing, risk, and contract data and analysis at their fingertips.
In summary, CCM is a key enabler of up to $340 billion of value, as a subset of the $500 billion in potential cost reductions as a result of supply chain and acquisition improvements outlined in the TCC report. Further, these tools will serve to enhance the experience and provide more insightful information for both our procurement specialists and buyers of goods and services across the government.